Mojo - April 2009

This may not be the most accurate chart floating around the tubes today (after all, TR might have choked out an environmentally-friendly pirate or two in his day) but it is certainly the most awesome. I think it's from Big Crush. Found via Mottram.

This could become a true headache for the White House—a high-profile case in which Spanish prosecutors bring charges against Gonzales; Douglas Feith, former undersecretary of defense; David Addington, former counsel to Vice President Dick Cheney; William Haynes, a former Pentagon lawyer; and John Yoo and Jay Bybee, two former Justice Department officials. Several steps must occur before any prosecution proceeds. If the prosecutors determine a full criminal investigation is warranted--as is expected--it will be up to a Spanish judge to open a full-fledged inquiry that could produce indictments. He could decide not to accept the recommendation. And, of course, it's possible that an investigation could end without indictments. The Spanish hook for the case is a simple one: Five Guantanamo detainees were either Spanish citizens or residents. And, by the way, Spanish courts claim jurisdiction that extends to other nations when it comes to torture and war crimes.

What would the Obama administration do, if the Spanish judge currently overseeing the Bush Six case, Baltasar Garzon (who is famous for pursuing terrorists and for having chased after Chilean dictator Augusto Pinochet), greenlights the investigation? At the Tuesday afternoon White House daily briefing, I asked Gibbs if the administration would cooperate with any requests from the Spaniards for information and documents. He had a predictable response: "I don't want to get involved in hypotheticals." He quickly pivoted to point out that Obama has moved to prohibit torture at Gitmo and elsewhere.

I posed a follow-up: Have you spoken to the Spanish government about this case? He seized on my use of the word "you" and, with a broad smile, said, "I have not spoken with the Spanish." Reporters in the room laughed. I obviously did not mean him personally; the "you" had referred to the Obama administration. Nor did I mean, I added, Bill Burton, the deputy press secretary, or any of the other press aides in the room. The point was whether the administration had been in contact with the Spanish government about the Bush Six investigation. "The Justice Department?" I asked. Gibbs, though, essentially brushed off the question: "I would send you to Justice. Like I said, I've not spoken" to the Spanish government.

That, too, was to be expected. Often White House press secretaries say, take your query elsewhere. Yet moments later, when a reporter asked Gibbs if Obama had any reaction to the conservative groups organizing "tea parties" of protest on tax day, he replied, "I've never monitored them nor spoken with the Spanish about them." People in the room laughed. And when the questioning in the room turned to the all-important subject of the Obama's new Portuguese water dog, Gibbs continued the joke. Noting that the dog might be spotted on the White House lawn later in the day or that it might not, he added that "the dog has also not talked to the Spanish about impending torture cases." More laughter. But I wondered, had the press secretary just made a joke about a torture investigation? Gibbs, like other press secretaries, uses humor to disarm, deflect, or dodge. But was this untoward?

The president and his aides do not seem eager to investigate the alleged misdeeds of the Bush-Cheney administration. The political calculation is obvious and not without justification: There's a lot of hard stuff to get done these days and probing former Bush officials could be seen as a distraction and possibly undermine political support for the administration and Democrats in Congress. But such political figuring may not influence the independent Spanish judicial system and Judge Garzon (who has been asked by Spanish prosecutors not to continue handling the Bush Six case because he is already overseeing terrorist prosecutions against these ex-Gitmo detainees). If an investigation proceeds, Obama could well have to decide whether or not to comply with Spanish requests for US government documents--that is, to help or hinder the investigation. Later in the process, Obama could even conceivably have to contend with extradition requests. If any of this comes to pass, it won't then be a laughing matter.

It's the eve of Tax Day, so let's discuss the topic for a minute. I know that when politicians talk about taxes, they are essentially walking a minefield. They can't say that corporations and the super rich should pay more; they can't say that in some instances, the government is better suited to distribute funds than the market; they can't say that corporations have a tendency to cheat on their taxes. Nevertheless, I'd love to hear someone in power acknowledge the (apparently) uncomfortable truth that the Internets and some think tanks have been trying to attract attention to: the fact that the highest tax rates in this country are simply not that high, by historical standards.

While federal tax burdens have risen very slightly from their nadir in 2003 and 2004, most income groups paid a smaller share of their income in federal taxes in 2006 than in every year prior to 2003 for which data are available, according to Congressional Budget Office data that cover the period 1979 to 2006.

Tax burdens on middle-income households remain near their lowest levels in decades. Households in the middle fifth of the income spectrum paid an average of 14.2 percent of their income in federal taxes in 2006. By contrast, since 1979, the average federal tax burden on these households has equaled 17 percent of income.

Even in 2000, before the 2001 and 2003 tax cuts, households in the middle fifth of the income scale paid a smaller share of their income in federal taxes than in any year since 1979, and tax burdens for most income groups were lower than their average for the 1979-1999 period.

As for the wealthy, the ones supposedly set to get soaked by our new socialist president, here's what CBPP found: "For the top 1 percent of households, federal individual income tax burdens were at their lowest level since 1986." Ah, but you are going to point out that the wealthy often pay a signficant share of their taxes not in income tax, but in capital gains, estate taxes, etc. CBPP is one step ahead of you: "Overall federal tax burdens on the top 1 percent of households were at their lowest level since 1992." The point here is that if President Obama follows through on his promise to raise the top tax rate from 36 percent to 39 percent, it won't crush the rich or incentivize them to not work hard. It will bring our current tax rates more in line with historical ones. (For more proof, see the chart here.)

PS -- Also, keep in mind that corporations and the super rich have devised highly sophisticated ways to get around paying their full taxes (lots on that here), meaning that their tax rate and their effective tax rate are often very different.

PPS -- For a short primer on why it's important to understand the meaning of marginal tax rates, see the comments section of this MoJoBlog post.

One outcome of the G-20 meeting (as I wrote yesterday) was an agreement to earmark as much as $1 trillion for developing countries, where the economic crisis is having a life-threatening impact. This figure is in line with what the United Nations estimates is needed to “buffer the blows of the global downturn on the most vulnerable.”

In fact, $1 trillion is the least the rich countries owe to the poor, considering the chaos and suffering our own economic policies and practices have brought upon them. In part, the additional hardships now being experienced by the developing nations result from the recession trickling down in a way that wealth never seems to do. But there’s more to the story than this.

Some of the heightened suffering in the developing world can be traced back to the Clinton and Bush administrations, when a series of legislative and regulatory changes paved the way for rampant speculation on the commodities market. What happened next is explained in a report by the Minneapolis-based Institute for Agriculture and Trade Policy (IATP), the most comprehensive source of information on this subject.

Wall Street went to work and bundled together groups of commodities futures–everything from oil to copper to basic staples like corn, wheat, rice, and soybeans–into commodity index funds, similar to what you find in the mutual fund business. The subsequent explosion of buying and selling by a handful of Wall Street firms (led by Goldman Sachs and AIG) ran the prices of different commodities up and down with little relation to any actual market or to the so-called laws of supply and demand. (James Galbraith describes the process in detail here.)

Berkeley prof and former Labor Secretary Robert Reich echoes Jim Ridgeway. Both are deeply skeptical about claims that the economy will soon be back on its feet. Here's Reich:

But we're not at the beginning of the end. I'm not even sure we're at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy. Of course mortgage rates are declining, mortgage orginations are surging, and people and companies are borrowing more. So much money is sloshing around the economy that its price is bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn't...

Some of the big banks will claim to be profitable, but don't bank on it. Neither they nor anyone else knows what their assets are really worth. Besides, the big banks are sitting on over $500 billion over taxpayer equity and loans. Who knows how they're calculating profits? Most importantly, there's still a yawning gap between the economy's productive capacity and what it's now producing, and absolutely nothing will turn the economy around until that gap begins to close.

I don't have the economic expertise to know if all of this is right, but if my choice is between Reich and Larry Kudlow, who boosted the market right until it fell off a cliff and is starting to boost it again (by saying we've already hit bottom, recovery is around the corner, etc.), I know who I'm going to trust.

Tuesday's Washington Post features a narrative of how Navy SEAL snipers dispatched three Somali pirates to free Richard Philips, their hostage and captain of the Maersk Alabama. In the hours following the operation, pundits hailed it as a master stroke, a surefire way (pun intended) to convince pirates that American vessels are not to be trifled with. Are they right? Certainly not. Yes, hostage-taking is a no-no and must be dealt with aggressively, but in a desperate and anarchic place like Somalia, it's unlikely that the deaths of three low-level criminals are going to do anything at all to alter the big picture--except, of course, to make it bloodier for everyone involved.

Until now, the motivation of Somali pirates has been clear: they want money. But shooting pirates who hitherto had shown little desire to kill their captives so much as ransom them off will likely change their calculations. Already one pirate leader has said that the next time he takes a US-flagged ship, the crew is as good as dead. That doesn't sound like a man cowering in the face of American power.

Yesterday, 161 days after the 2008 elections, Al Franken was declared the winner of the Minnesota Senate race. Former senator Norm Coleman pressed every angle he could in front of a bipartisan three-member election court, and the end result was that Franken's lead grew about 100 votes, leading the court to rule that Franken is indeed the winner and ought to be seated. "Enough is enough," said DNC chair Tim Kaine, who urged Coleman to concede so that Minnesota could have two votes in the Senate. (The GOP has been silent on the ruling.)

Coleman, of course, has no intention of heeding Kaine's advice. He plans on appealing to the Minnesota state supreme court, and to SCOTUS if necessary. As many have pointed out, the longer Coleman ties Franken up in legal challenges, the longer the Senate Democrats have to scrap and hustle to find an extra vote on all of their major priorities.

It's kind of astounding how long Franken has been at this. I sat down with him in spring 2007 in order to write a magazine profile of him and his Senate chances, and at that time he had already spent 18 months attending every political event he could find in small- and medium-sized Minnesota towns (wellll out of the spotlight) in order to slowly built support for his run. No one can accuse him of not doing the legwork on this one. Now he's closer than ever to realizing his dream; while he waits for the final word, maybe he can work on his vocals.

This weekend, the New York Times Magazine made its contribution to the array of recent reports that some women are having sex with men for money, still, but now have the additional option of setting it up via the internets with websites like SeekingArragement.com. The piece contains some pretty interesting profiles of arrangement seekers of both sexes, from the math nerd with the Pygmalion complex to the businesswoman who doesn't even need the cash but is just a literally money-grubbing whore to the impossibly deluded finance exec who pays women for sex and then asks, inexplicably, "Would she still want to be with me even without the money?"

A year and a half ago, I went on a couple of dates with sugar daddies to report on the phenomenon for MoJo. But to me then, as now, the interesting story was not that people are using the Internet, as they were inevitably going to do, to make these arrangements and so transparently, but that the increased accessibility that the Internet provides has the potential to draw a whole new crowd into such arrangements. I do know some gals who have either considered sugar daddies or slept with them via these sites who wouldn't otherwise have gotten into sex work. And one of the girls in the Times piece, for example, would never have become someone's paid mistress had she not found the website and, subsequently, the man so easily. It's like the correlation between accessibility and usage that opponents of legalizing drugs are always going on about.

Seeking Arrangement has three times as many users now as it did when I filed my story. Today, it "pays to have its ads pop up on search engines whenever someone types in 'student loan,' 'tuition help,' 'college support' or 'help with rent,'" the Times article reports. That kind of visibility plus ease of opportunity plus a recession could add a whole new slew of applicants to the sugar baby pool yet. I wonder how long it'll take before they start linking their ads to searches for "classified" or "Monster.com" or "unemployment."

At the G20 summit that concluded last week, the world’s leading economic powers made what looked like a generous commitment to poorer nations: $1 trillion to help the developing countries weather the economic crisis, which will drive an estimated 50 million more people into dire poverty. But as Robert Weissman writes on the Huffington Post today, the apparent largesse might not be all it seems.

To begin with, the $1 trillion figure is overstated, and much of the funding is in the form of loans. Even more importantly, Weissman argues:

The entire purpose of the G20’s assistance may be thwarted by the institution through which the G20 countries chose to channel most of the money: the International Monetary Fund (IMF). The logic of providing assistance to developing countries is to help them adopt expansionary policies in time of economic downturn. Yet the IMF is forcing countries in financial distress to pursue contractionary policies–exactly the opposite of the stimulative policies carried out by the rich countries (and supported by the IMF, for the rich countries).

For decades now critics have excoriated the IMF for lending policies that tie financing to a country’s willingness to tighten its belt by cutting social programs, and pursuing a program of financial deregulation, privatization, and foreign investment–precisely the sorts of policies that created the financial mess in the first place, and precisely the kinds of changes will make suffering in the developing world even worse. The IMF says it is changing its approach–but as Weissman points out, Congress can hold them to this dubious claim by attaching conditions to U.S. funding.

One eminently practical suggestion for how some of this funding might be used comes from HelpAge International, a grassroots organization focused on the needs of older peoples of the world. HelpAge argues that to be effective, development policy “must respond to the intergenerational nature of poverty and to rapid population ageing.” As the G20 meeting concluded, HelpAge urged that funds be provided ”to build social security schemes that put money directly into the hands of the world’s poor and deliver long-term income security.’’

More than three quarters of the world’s population has no access to anything resembling social security. That includes 100 million people living on less than $1 a day. The economic downslide makes their survival even more tenuous. As HelpAge argues:

This New York Times article on a rare public appearance by Justice Clarence Thomas -- a talk with high school essay contest winners -- is enough to make you feel sorry for the poor schmuck, if he wasn't on the most powerful court in the land and thus able to place the imprint of his neuroses and obvious self-loathing on the legacy of American jurisprudence.

The article makes clear, simply by quoting the famously taciturn Thomas, that he believes he is dumber than all the other justices and a good number of law professors, and retreats into isolation ("I tend to be morose sometimes") to nurse his wounds and brood. What an awful purgatory of an existence: to know you are a fraud, to know that everyone else knows you are a fraud, and yet to be locked into your job more or less for life. It's enough to ruin a person. And it appears it has.